Most agencies use one pricing model. There are twelve.
They default to time and materials because it's the easiest one to justify in a pitch, then never leave it. That's a shame, because it's also the model that captures the least value of the twelve. Here's the full set, with real numbers on each, so you can see what you're actually choosing between.
The first rule of pricing: price the client, not the work.
Two clients can want the same deliverable and be worth entirely different fees. The value of the outcome, the size of the opportunity, and what the relationship is worth long term are never the same twice. Cost the work if you need a floor. Never let it become the ceiling.
1. Time and Materials
Hours at agreed rates. You invoice against a timesheet.
It's the safest model there is, and the least interesting commercially. Your upside is capped at the hours in the week, and you've just invited the client to argue with your timesheet instead of trusting your thinking.
In practice: a rate card runs Strategy Director at £1,400 a day, Creative Director £1,200, Senior Designer £750, Account Manager £600. A project eats 4 strategy days, 6 CD days, 12 designer days, 8 account days. Invoice: £26,600.
2. Day Rate or Blended Day Rate
One rate across every discipline, rather than itemised by seniority.
Simpler than a rate card, and it stops the client arguing about who did what. Get the delivered mix wrong against the assumed blend and the margin goes with it.
In practice: the same 30 days, blended at £850. Invoice: £25,500. Slightly less than the itemised version, with none of the line-by-line fighting.
3. Fixed Project Fee
An agreed price for a defined scope. You carry the delivery risk.
This is where expertise finally gets rewarded. Get faster, get better, keep more. But only if the scope is tight enough that you'd both recognise a change the moment it happened, and you actually raise it when it does.
In practice: a brand identity project quoted at £45,000. Internal cost estimate: 45 days at £600, so £27,000, a 40% margin if you hit the estimate. Deliver in 38 days, margin rises to 49%. Take 60 days, it falls to 20%. Same fee either way.
4. Retainers
Three different things wearing one name. A time retainer buys capacity. A scope retainer buys outputs. An access retainer buys your judgement.
It's the best revenue an agency can have: predictable, compounding, and it's what makes a business fundable. It's also where money quietly disappears, because nobody raises a change order for something that already feels covered.
In practice: a time retainer might run 10 days a month at £900, £9,000 monthly, £108,000 a year. A scope retainer could be £12,000 a month for one campaign concept, four content drops, monthly reporting and a quarterly strategy session. An access retainer might be £4,000 a month for a fortnightly session with a Strategy Director plus reasonable ad hoc contact.
5. Value Based Pricing
Price the outcome, not the hours.
Every agency says they want this. Almost none actually do it, because it means understanding the client's economics well enough to model the upside, then having the nerve to say the number out loud.
In practice: a funnel converts at 2%, on 500,000 visitors a year at £120 average order value, £1.2m revenue. Lift conversion to 2.6% and that's another £360,000 a year, every year. Charge £26,600 for the hours and you've left almost all of that on the table. £90,000 is defensible. The conversation is about the £360,000, not the day rate.
6. Productised and Subscription Pricing
Fixed scope, fixed method, fixed price, published before anyone calls.
It kills the sales cycle stone dead and forces you to actually document your IP. Try it on bespoke work and you've just built fixed fee with worse margins and a nicer name.
In practice: a positioning sprint at £15,000, two weeks, three named workshops, one output document, no negotiation. Or a subscription: £3,500 a month, unlimited design requests, one active at a time, 48-hour turnaround.
7. Performance and Outcome Based
Part or all of the fee rides on the result.
Genuinely aligns you with the client. It also exposes you to media budget, sales follow-up and product quality, none of which you control, and attribution rows are some of the ugliest conversations in this industry.
In practice: a £30,000 base fee, plus £15 per qualified lead above a 400 baseline. At 900 leads, that's £37,500. At 1,600 leads, £48,000. Below baseline, you're on £30,000 regardless, which is why the base has to cover your costs.
8. Commission
A cut of the media spend you manage.
Clean, easy to run, and it scales as the client grows. It also means your income goes up when the client spends more, whether or not that's the right advice. Clients have clocked this.
In practice: £600,000 annual media spend. At 12%, that's £72,000. At 8%, £48,000. Same work, different number, entirely dependent on the percentage negotiated at the start.
9. Licensing and Royalty
Keep ownership of what you made. License the use of it.
Barely anyone in this industry does this, and that's the opportunity. It needs proper legal groundwork, since standard terms hand the client everything on payment. Get it right and a one-off becomes an annuity.
In practice: a brand platform licensed at £40,000 a year for three years, rather than sold outright for £75,000. Or a royalty: 2% of net sales on a product whose packaging and positioning you built.
10. Equity and Revenue Share
Take a stake instead of, or alongside, the fee.
A lottery ticket, and the ticket costs you real capacity. Cap how much of your team's time is exposed at any one time, and don't do it for a client you're not genuinely backing.
In practice: a startup can't fund a £60,000 brand build. You agree £20,000 cash plus 2% equity. Exit at £20m, that stake is worth £400,000. Exit at nothing, which is what happens most of the time, you did £60,000 of work for £20,000.
11. Tiered or Package Pricing
Define two or three bundles at different price points and let the client choose.
It turns a binary yes/no into a which-one, which is a different and easier conversation for the client to say yes to. The trap is building tiers by cutting scope rather than building them around the client's actual decision. Good/Better/Best only works when each tier is a complete, sensible answer for a genuinely different type of buyer.
In practice: a positioning engagement offered at three levels. Good: a one-day audit and written recommendations, £7,500. Better: audit plus a two-week sprint with workshops and a positioning document, £18,000. Best: full positioning programme with implementation support over three months, £35,000. Most clients pick the middle. That's the point.
12. Hybrid Models
Most real relationships run on several of these at once.
It's usually the right call. Retainer for the predictable work, fixed fee for the defined work, time and materials for the genuinely unknowable, an outcome bonus where you can actually claim credit for the result. The failure mode is a hybrid built because nobody could agree, not because it fit.
In practice: an £8,000 a month retainer for ongoing strategic input, plus fixed fees for projects as they arise, plus a performance bonus against an annual target. Base £96,000, project revenue perhaps £120,000, bonus £25,000 if the target lands.
How to Choose Between Them
Three questions, in this order.
Can this actually be scoped? If not, time and materials protects you.
How measurable is the outcome, and how much of it is genuinely yours? If you can point at a number and defend your claim to it, price the value, not the hours.
Who's carrying the risk, and are they getting paid for it? Every model here is a risk transfer. If you've taken on risk without the reward that should come with it, you haven't priced the work. You've absorbed it.
The model matters less than you'd think. An agency running plain time and materials with tight scope control and the nerve to raise a rate every year will out-earn an agency running clever value pricing that never once raises a change order.
One thing rides underneath all twelve models, and it's not a thirteenth one: pricing the client rather than the work. Value based pricing does this openly, since there's no rate card to compare, only a number derived from what the outcome is worth to that client. Fixed fee and retainers do it quietly, because almost no agency publishes what it charges and every quote gets negotiated in private. Productised pricing is the exception, and deliberately so, the entire point of that model is one published price for everyone.
Keep fee terms confidential in every contract, and keep the client-facing story about value, never about what anyone else pays. This industry is small and clients talk, especially the senior ones who refer each other work. A friendly relationship charged materially less than a demanding one for the same scope isn't a pricing strategy the day it comes out. It's a betrayal with a confidentiality clause attached.
A Note on Scope Creep
A client wants to change something. Move a deadline. Miss a requirement. Add a line to the brief that wasn't there Tuesday. The instinct is to say yes on the spot, because saying yes feels like good service and a pause feels like friction.
Don't say yes on the spot. Say this instead: "Let me see how we can do it, and I'll come back to you."
That's not stalling. It's the gap where the actual decision gets made. Every new ask, every change, gets a cost revision, full stop, no exceptions made because the client's nice or the change looks small. Small changes are exactly the ones that go unpriced, and they're exactly the ones that add up to a project delivered at half the margin it was quoted at.
This works because it costs the client nothing to hear and costs you nothing to say. Nobody has ever been offended by "let me check and come back to you." What erodes the relationship is the opposite: saying yes for free ten times, then having to say no, or say "actually that'll cost extra," on the eleventh. By then you've trained them to expect free, and the conversation that should have been routine now feels like a confrontation.
Frequently Asked Questions
What is the most common agency pricing model?
Time and materials, hourly or daily rates billed against a timesheet. It's also the model that captures the least value, since it caps upside at the hours available and turns pricing conversations into arguments about time rather than outcome.
What is value based pricing for agencies?
Pricing tied to what an outcome is worth to the client, rather than what it costs to produce. It requires modelling the client's own economics well enough to defend a number, and it's the model most agencies claim to want and rarely actually run.
Should agencies charge every client the same rate?
No. The first rule of pricing is to price the client, not the work: two clients wanting the same deliverable can be worth entirely different fees, depending on the value of the outcome and the size of the opportunity. Keep fee terms confidential, and keep the reasoning about value, not about what other clients pay.
How should agencies handle scope creep?
Never agree to a change on the spot. Say "let me see how we can do it, and I'll come back to you," then price every new ask or change without exception, however small it looks. Small unpriced changes are what erode margin over the course of a project.
What's the difference between a retainer and a subscription?
A retainer is usually a time or scope commitment renewed monthly, often bespoke to the client. A subscription is a fixed, published price for a fixed, repeatable scope, available to anyone. Retainers are negotiated privately; subscriptions are the same for everyone who buys them.
Want to know if your pricing is capping your agency's value? Take The 10Levers® diagnostic, or look at Ten Lever™ Transformations if pricing is the lever holding you back.